Item 1. Financial Statements

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Item 1. Financial Statements

Condensed Consolidated Balance Sheets

$ in millions, except per share amounts (unaudited)


	November 1, 2025		February 1, 2025		November 2, 2024
Assets
Current assets
Cash and cash equivalents	$	923	$	1,578	$	643
Receivables, net	1,017		1,044		932
Merchandise inventories	7,993		5,085		7,806
Other current assets	640		517		574
Total current assets	10,573		8,224		9,955
Property and equipment, net	2,037		2,122		2,196
Operating lease assets	2,838		2,833		2,842
Goodwill	790		908		1,383
Other assets	548		695		642
Total assets	$	16,786	$	14,782	$	17,018

Liabilities and equity
Current liabilities
Accounts payable	$	7,319	$	4,980	$	7,145
Unredeemed gift card liabilities	231		253		246
Deferred revenue	853		951		878
Accrued compensation and related expenses	392		464		361
Accrued liabilities	689		741		690
Current portion of operating lease liabilities	619		617		616
Current portion of long-term debt	10		10		12
Total current liabilities	10,113		8,016		9,948
Long-term operating lease liabilities	2,309		2,282		2,293
Long-term debt	1,155		1,144		1,144
Long-term liabilities	556		532		551
Contingencies (Note 10)
Equity
Best Buy Co., Inc. Shareholders' Equity
Preferred stock, $1.00 par value: Authorized - 400,000 shares; Issued and outstanding - none	-		-		-
Common stock, $0.10 par value: Authorized - 1.0 billion shares; Issued and outstanding - 210.0 million, 211.4 million and 213.8 million shares, respectively	22		22		22
Additional paid-in capital	16		-		-
Retained earnings	2,306		2,486		2,751
Accumulated other comprehensive income	309		300		309
Total equity	2,653		2,808		3,082
Total liabilities and equity	$	16,786	$	14,782	$	17,018

NOTE: The Consolidated Balance Sheet as of February 1, 2025, has been condensed from the audited consolidated financial statements.

See Notes to Condensed Consolidated Financial Statements.

Condensed Consolidated Statements of Earnings

$ and shares in millions, except per share amounts (unaudited)


	Three Months Ended				Nine Months Ended
	November 1, 2025		November 2, 2024		November 1, 2025		November 2, 2024
Revenue	$	9,672	$	9,445	$	27,877	$	27,580
Cost of sales	7,424		7,228		21,386		21,113
Gross profit	2,248		2,217		6,491		6,467

Selling, general and administrative expenses	1,884		1,871		5,434		5,418

Restructuring charges	(5)		(4)		218		4
Goodwill and intangible asset impairments	171		-		171		-
Operating income	198		350		668		1,045

Other income (expense):
Loss on disposal of subsidiaries	-		-		(4)		-
Investment income and other	19		19		52		65
Interest expense	(12)		(13)		(36)		(38)
Earnings before income tax expense and equity in income (loss) of affiliates	205		356		680		1,072
Income tax expense	64		85		151		266

Equity in income (loss) of affiliates	(1)		2		(1)		4
Net earnings	$	140	$	273	$	528	$	810

Basic earnings per share	$	0.67	$	1.27	$	2.50	$	3.76
Diluted earnings per share	$	0.66	$	1.26	$	2.48	$	3.73

Weighted-average common shares outstanding:
Basic	210.7		214.8		211.4		215.7
Diluted	212.1		216.7		212.7		217.2

See Notes to Condensed Consolidated Financial Statements.

Condensed Consolidated Statements of Comprehensive Income

$ in millions (unaudited)


	Three Months Ended				Nine Months Ended
	November 1, 2025		November 2, 2024		November 1, 2025		November 2, 2024
Net earnings	$	140	$	273	$	528	$	810
Foreign currency translation adjustments, net of tax	(4)		(1)		9		(8)
Comprehensive income	$	136	$	272	$	537	$	802

See Notes to Condensed Consolidated Financial Statements.

Condensed Consolidated Statements of Cash Flows

$ in millions (unaudited)


	Nine Months Ended
	November 1, 2025		November 2, 2024
Operating activities
Net earnings	$	528	$	810
Adjustments to reconcile net earnings to total cash provided by operating activities:
Depreciation and amortization	628		650
Restructuring charges	218		4
Goodwill and intangible asset impairments	171		-
Stock-based compensation	106		108
Deferred income taxes	37		1
Loss on disposal of subsidiaries	4		-
Long-lived asset impairments	21		2
Other, net	6		-
Changes in operating assets and liabilities:
Receivables	23		4
Merchandise inventories	(2,903)		(2,869)
Other assets	3		(16)
Accounts payable	2,315		2,483
Income taxes	(133)		(219)
Other liabilities	(340)		(397)
Total cash provided by operating activities	684		561

Investing activities
Additions to property and equipment	(529)		(528)
Disposal of subsidiary	(27)		-
Other, net	1		6
Total cash used in investing activities	(555)		(522)

Financing activities
Repurchase of common stock	(200)		(285)
Dividends paid	(602)		(607)
Repayments of debt	(10)		(13)
Other, net	4		13
Total cash used in financing activities	(808)		(892)

Effect of exchange rate changes on cash and cash equivalents	5		(2)
Decrease in cash, cash equivalents and restricted cash	(674)		(855)
Cash, cash equivalents and restricted cash at beginning of period	1,868		1,793
Cash, cash equivalents and restricted cash at end of period	$	1,194	$	938

See Notes to Condensed Consolidated Financial Statements.

Condensed Consolidated Statements of Changes in Shareholders' Equity

$ and shares in millions, except per share amounts (unaudited)


	Common Shares	Common Stock		Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total
Balances at August 2, 2025	210.4	$	22	$	-	$	2,381	$	313	$	2,716
Net earnings, three months ended November 1, 2025	-	-		-		140		-		140
Other comprehensive loss:
Foreign currency translation adjustments, net of tax	-	-		-		-		(4)		(4)
Stock-based compensation	-	-		31		-		-		31
Issuance of common stock	0.1	-		3		-		-		3
Common stock dividends, $0.95 per share	-	-		4		(203)		-		(199)
Repurchase of common stock	(0.5)	-		(22)		(12)		-		(34)
Balances at November 1, 2025	210.0	$	22	$	16	$	2,306	$	309	$	2,653

Balances at February 1, 2025	211.4	$	22	$	-	$	2,486	$	300	$	2,808
Net earnings, nine months ended November 1, 2025	-	-		-		528		-		528
Other comprehensive income:
Foreign currency translation adjustments, net of tax	-	-		-		-		9		9
Stock-based compensation	-	-		106		-		-		106
Issuance of common stock	1.6	-		5		-		-		5
Common stock dividends, $2.85 per share	-	-		14		(616)		-		(602)
Repurchase of common stock	(3.0)	-		(109)		(92)		-		(201)
Balances at November 1, 2025	210.0	$	22	$	16	$	2,306	$	309	$	2,653

Balances at August 3, 2024	215.0	$	22	$	-	$	2,775	$	310	$	3,107
Net earnings, three months ended November 2, 2024	-	-		-		273		-		273
Other comprehensive loss:
Foreign currency translation adjustments, net of tax	-	-		-		-		(1)		(1)
Stock-based compensation	-	-		34		-		-		34
Issuance of common stock	0.2	-		6		-		-		6
Common stock dividends, $0.94 per share	-	-		4		(206)		-		(202)
Repurchase of common stock	(1.4)	-		(44)		(91)		-		(135)
Balances at November 2, 2024	213.8	$	22	$	-	$	2,751	$	309	$	3,082

Balances at February 3, 2024	215.4	$	22	$	31	$	2,683	$	317	$	3,053
Net earnings, nine months ended November 2, 2024	-	-		-		810		-		810
Other comprehensive loss:
Foreign currency translation adjustments, net of tax	-	-		-		-		(8)		(8)
Stock-based compensation	-	-		108		-		-		108
Issuance of common stock	1.6	-		11		-		-		11
Common stock dividends, $2.82 per share	-	-		13		(620)		-		(607)
Repurchase of common stock	(3.2)	-		(163)		(122)		-		(285)
Balances at November 2, 2024	213.8	$	22	$	-	$	2,751	$	309	$	3,082

See Notes to Condensed Consolidated Financial Statements.

Notes to Condensed Consolidated Financial Statements

(unaudited)

1. Basis of Presentation

Unless the context otherwise requires, the terms “Best Buy,” “we,” “us,” “our” and the “company” in these Notes to Condensed Consolidated Financial Statements refer to Best Buy Co., Inc. and, as applicable, its consolidated subsidiaries.

In the opinion of management, the accompanying condensed consolidated financial statements contain all adjustments necessary for a fair presentation as prescribed by accounting principles generally accepted in the U.S. (“GAAP”). All adjustments were comprised of normal recurring adjustments, except as noted in these Notes to Condensed Consolidated Financial Statements.

A large proportion of our revenue and earnings is generated in the fiscal fourth quarter, which includes the majority of the holiday shopping season. Due to the seasonal nature of our business, interim results are not necessarily indicative of results for the entire fiscal year. The interim financial statements and the related notes included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended February 1, 2025. The first nine months of fiscal 2026 and fiscal 2025 each included 39 weeks.

In preparing the accompanying condensed consolidated financial statements, we evaluated the period from November 1, 2025, through the date the financial statements were issued for material subsequent events requiring recognition or disclosure. No such events were identified.

Recently Issued Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires disclosure of specific categories meeting a quantitative threshold within the income tax rate reconciliation, as well as disaggregation of income taxes paid by jurisdiction. This ASU, which can be applied either prospectively or retrospectively, is effective for annual periods beginning after December 15, 2024, with early adoption permitted. We are currently evaluating the impact of the ASU and expect to include updated income tax disclosures in our fiscal 2026 Form 10-K.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disclosure of specific expense categories in the notes to financial statements. The amendments are effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027. We are currently evaluating the impact of the ASU and expect to include updated expense disclosures in our fiscal 2028 Form 10-K.

Recently Enacted Tax Legislation

On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act (“OB3”). The OB3 extends key provisions of the 2017 Tax Cuts and Jobs Act, including, but not limited to, domestic research expensing, 100% bonus depreciation on tangible property and modifications to the international tax framework. The provisions do not have a material impact on our income tax expense.

Supply Chain Financing

We have a supply chain financing program with an independent financial institution, whereby some of our suppliers have the opportunity to receive accounts payable settlements early, at a discount, facilitated by the financial institution. Our liability associated with the funded participation in the program, which is primarily included in Accounts payable on our Condensed Consolidated Balance Sheets, was $1,091 million, $398 million and $793 million as of November 1, 2025, February 1, 2025, and November 2, 2024, respectively.

Total Cash, Cash Equivalents and Restricted Cash

Cash, cash equivalents and restricted cash reported on our Condensed Consolidated Balance Sheets are reconciled to the totals shown on our Condensed Consolidated Statements of Cash Flows as follows ($ in millions):


	November 1, 2025		February 1, 2025		November 2, 2024
Cash and cash equivalents	$	923	$	1,578	$	643
Restricted cash included in Other current assets	271		290		295
Total cash, cash equivalents and restricted cash	$	1,194	$	1,868	$	938

Amounts included in restricted cash are primarily restricted to cover product protection plans provided under our membership offerings and self-insurance liabilities.

Reclassification

Certain reclassifications of immaterial amounts previously reported have been made to the accompanying Condensed Consolidated Statements of Cash Flows to maintain consistency and comparability between periods presented.

2. Restructuring

Restructuring charges were as follows ($ in millions):


	Three Months Ended				Nine Months Ended
	November 1, 2025		November 2, 2024		November 1, 2025		November 2, 2024
Fiscal 2026 Labor and Store Optimization Initiative	$	(1)	$	—	$	121	$	—
Best Buy Health Optimization and China Sourcing Initiative	(3)		—		102		—
Fiscal 2024 Restructuring Initiative	(1)		(4)		(5)		6
Fiscal 2023 Resource Optimization Initiative	—		—		—		(2)
Total	$	(5)	$	(4)	$	218	$	4

Fiscal 2026 Labor and Store Optimization Initiative

In the second quarter of fiscal 2026, we commenced a restructuring initiative intended to align field resources with changing customer behaviors, close select non-traditional store locations and redirect corporate resources for better alignment with our strategy. We currently do not expect to incur material future restructuring charges related to this initiative.

All charges incurred related to this initiative were from continuing operations and presented within Restructuring charges on our Condensed Consolidated Statements of Earnings. The composition of restructuring charges incurred related to this initiative were as follows ($ in millions):


	Three Months Ended						Nine Months Ended
	November 1, 2025						November 1, 2025
	Domestic		International		Total		Domestic		International		Total
Termination benefits	$	(1)	$	—	$	(1)	$	77	$	3	$	80
Asset impairments(1)	—		—		—		41		—		41
Total	$	(1)	$	—	$	(1)	$	118	$	3	$	121

(1)Represents asset impairments primarily related to planned store closures, including an impairment related to an indefinite-lived tradename. See Note 3, Goodwill and Intangible Assets, for additional information. The remaining carrying value of net assets approximates fair value and was immaterial as of November 1, 2025.

Restructuring accrual activity related to this initiative was as follows ($ in millions):


	Termination Benefits
	Domestic		International		Total
Balances at February 1, 2025	$	-	$	-	$	-
Charges	78		3		81
Cash payments	(17)		-		(17)
Adjustments(1)	(1)		-		(1)
Balances at November 1, 2025	$	60	$	3	$	63

(1)Represents adjustments primarily related to higher-than-expected employee retention from previously planned organizational changes.

Our restructuring accrual liabilities related to termination benefits of $63 million as of November 1, 2025, reflect expected future cash payments primarily during fiscal 2027.

Best Buy Health Optimization and China Sourcing Initiative

In the first quarter of fiscal 2026, we commenced a restructuring initiative primarily focused on optimizing our Best Buy Health business by taking actions to maximize value and improve profitability in light of its performance against our original forecasting. These actions included the exit of a component of our Best Buy Health business that was finalized during the second quarter of fiscal 2026. In addition, we also made significant changes to reduce our exposure to tariffs, particularly in China. We currently do not expect to incur material future restructuring charges related to this initiative.

All charges incurred related to this initiative were from continuing operations in our Domestic segment and presented within Restructuring charges on our Condensed Consolidated Statements of Earnings. The composition of restructuring charges incurred related to this initiative were as follows ($ in millions):


	Three Months Ended		Nine Months Ended
	November 1, 2025		November 1, 2025
Asset impairments and other costs(1)	$	-	$	70
Termination benefits	(3)		32
Total	$	(3)	$	102

(1)Primarily represents the full impairment of net assets related to a component of our Best Buy Health business and other exit costs. The remaining carrying value of net assets approximates fair value and was immaterial as of November 1, 2025.

Restructuring accrual activity related to this initiative was as follows ($ in millions):


	Termination Benefits		Asset Impairments and Other Costs		Total
Balances at February 1, 2025	$	—	$	—	$	—
Charges	38		28		66
Cash payments	(17)		(27)		(44)
Adjustments(1)	(6)		(1)		(7)
Balances at November 1, 2025	$	15	$	—	$	15

(1)Primarily represents adjustments for termination benefits primarily related to higher-than-expected employee retention from previously planned organizational changes.

Our restructuring accrual liabilities related to termination benefits of $15 million as of November 1, 2025, reflect expected future cash payments primarily during fiscal 2026.

Fiscal 2024 Restructuring Initiative

During the fourth quarter of fiscal 2024, we commenced an enterprise-wide restructuring initiative intended to align field labor resources with where customers want to shop and to optimize the customer experience, redirect corporate resources for better alignment with our strategy and right-size resources to better align with our revenue outlook for fiscal 2025. We do not expect to incur material future restructuring charges related to this initiative.

All charges incurred related to this initiative were comprised of employee termination benefits from continuing operations and were presented within Restructuring charges on our Condensed Consolidated Statements of Earnings as follows ($ in millions):


	Three Months Ended				Nine Months Ended				Cumulative Amount as of
	November 1, 2025		November 2, 2024		November 1, 2025		November 2, 2024		November 1, 2025
Domestic	$	(1)	$	(4)	$	(5)	$	6	$	161
International	-		-		-		-		8
Total	$	(1)	$	(4)	$	(5)	$	6	$	169

Restructuring accrual activity related to this initiative was as follows ($ in millions):


	Termination Benefits
	Domestic		International		Total
Balances at February 1, 2025	$	80	$	5	$	85
Cash payments	(21)		(3)		(24)
Adjustments(1)	(5)		-		(5)
Balances at November 1, 2025	$	54	$	2	$	56

(1)Represents adjustments primarily related to higher-than-expected employee retention from previously planned organizational changes.

Our restructuring accrual liabilities related to termination benefits of $56 million as of November 1, 2025, reflect expected future cash payments primarily during fiscal 2027.

3. Goodwill and Intangible Assets

Goodwill

Goodwill balances by segment were as follows ($ in millions):


	November 1, 2025				February 1, 2025				November 2, 2024
	Gross Carrying Amount		Cumulative Impairment		Gross Carrying Amount		Cumulative Impairment		Gross Carrying Amount		Cumulative Impairment
Domestic	$	1,450	$	(660)	$	1,450	$	(542)	$	1,450	$	(67)
International	608		(608)		608		(608)		608		(608)
Total	$	2,058	$	(1,268)	$	2,058	$	(1,150)	$	2,058	$	(675)

In the third quarter of fiscal 2026, we recorded a goodwill impairment of $118 million within the Domestic segment for the Best Buy Health reporting unit. The carrying value of the Best Buy Health reporting unit as of November 1, 2025, was $298 million. A change in Best Buy Health’s customer base during the quarter resulted in an impairment review of all Best Buy Health assets. The fair value of Best Buy Health was estimated primarily based on discounted cash flow analysis. The impairment reflects downward revisions of our revenue growth rates and margin rates compared to previous projections, in part due to pressures in the Medicaid and Medicare Advantage markets. In addition, definite-lived intangible asset impairments and long-lived asset impairments were also recorded. Refer to Note 4, Fair Value Measurements, for additional information.

Indefinite-Lived Intangible Assets

In the second quarter of fiscal 2026, we recorded a full impairment of $16 million related to our only remaining indefinite-lived intangible asset as a result of restructuring activity that commenced in the second quarter of fiscal 2026. Refer to Note 2, Restructuring, for additional information.

Definite-Lived Intangible Assets

We have definite-lived intangible assets recorded within Other assets on our Condensed Consolidated Balance Sheets as follows ($ in millions):


	November 1, 2025				February 1, 2025				November 2, 2024				Weighted-Average Useful Life Remaining as of November 1, 2025 (in years)
	Gross Carrying Amount(1)		Accumulated Amortization(1)		Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Customer relationships(2)	$	339	$	339	$	360	$	285	$	360	$	283	-
Tradenames	87		80		92		79		92		77		0.9
Developed technology	56		56		64		61		64		60		-
Total	$	482	$	475	$	516	$	425	$	516	$	420	0.9

(1)Gross carrying amount and accumulated amortization as of November 1, 2025, excludes $34 million and $16 million, respectively, of definite-lived intangible assets related to the exit of a component of our Best Buy Health business in the second quarter of fiscal 2026. See Note 2, Restructuring, for additional information.

(2)Accumulated amortization as of November 1, 2025, includes $53 million of impairments related to Best Buy Health included in Goodwill and intangible asset impairments on our Condensed Consolidated Statements of Earnings.

Amortization expense, included in Selling, general and administrative expenses ("SG&A") on our Condensed Consolidated Statements of Earnings, was as follows ($ in millions):


	Three Months Ended				Nine Months Ended
	November 1, 2025		November 2, 2024		November 1, 2025		November 2, 2024
Amortization expense	$	3	$	5	$	12	$	16

Amortization expense expected to be recognized in future periods is as follows ($ in millions):


	Amortization Expense
Remainder of fiscal 2026	$	2
Fiscal 2027	5

4. Fair Value Measurements

Fair value measurements are reported in one of three levels based on the lowest level of significant input used: Level 1 (unadjusted quoted prices in active markets); Level 2 (observable market inputs, other than quoted prices included in Level 1); and Level 3 (unobservable inputs that cannot be corroborated by observable market data).

Recurring Fair Value Measurements

Financial assets and liabilities accounted for at fair value were as follows ($ in millions):


			Fair Value as of
	Balance Sheet Location(1)	Fair Value Hierarchy	November 1, 2025		February 1, 2025		November 2, 2024
Assets
Money market funds(2)	Cash and cash equivalents	Level 1	$	29	$	439	$	40
Time deposits(3)	Cash and cash equivalents	Level 2	134		150		5
Money market funds(2)	Other current assets	Level 1	122		140		139
Time deposits(3)	Other current assets	Level 2	40		50		50
Marketable securities that fund deferred compensation(4)	Other assets	Level 1	41		39		38

Liabilities
Interest rate swap derivative instruments(5)	Long-term liabilities	Level 2	7		14		16

(1)Balance sheet location is determined by the length to maturity at date of purchase and whether the assets are restricted for particular use.

(2)Valued at quoted market prices in active markets at period end.

(3)Valued at face value plus accrued interest at period end, which approximates fair value.

(4)Valued using the performance of mutual funds that trade with sufficient frequency and volume to obtain pricing information on an ongoing basis.

(5)Valued using readily observable market inputs. These instruments are custom, over-the-counter contracts with various bank counterparties that are not traded on an active market. See Note 5, Derivative Instruments, for additional information.

Nonrecurring Fair Value Measurements

In the first six months of fiscal 2026, we recorded asset impairments and other costs as a result of restructuring initiatives that commenced in the first and second quarters of fiscal 2026. Refer to Note 2, Restructuring, for additional information.

In the third quarter of fiscal 2026, we recorded goodwill and definite-lived intangible asset impairments related to Best Buy Health. Refer to Note 3, Goodwill and Intangible Assets, for additional information. In addition, we recorded $21 million of long-lived asset impairments related to Best Buy Health, included in SG&A on our Condensed Consolidated Statements of Earnings. The remaining carrying value of net long-lived assets subject to impairment approximates fair value and was immaterial as of November 1, 2025.

All nonrecurring fair value remeasurements mentioned above were based on significant unobservable inputs (Level 3).

Fair Value of Financial Instruments

The fair values of cash, certain restricted cash, receivables, accounts payable and other payables approximated their carrying values because of the short-term nature of these instruments. If these instruments were measured at fair value in the financial statements, they would be classified as Level 1 in the fair value hierarchy. Fair values for other investments held at cost are not readily available, but we estimate that the carrying values for these investments approximate their fair values.

Long-term debt is presented at carrying value on our Condensed Consolidated Balance Sheets. If our long-term debt were recorded at fair value, it would be classified as Level 2 in the fair value hierarchy. Long-term debt balances were as follows ($ in millions):


	November 1, 2025				February 1, 2025				November 2, 2024
	Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value
Long-term debt(1)	$	1,076	$	1,143	$	1,031	$	1,136	$	1,028	$	1,134

(1)Excludes debt discounts, issuance costs and finance lease obligations.

5. Derivative Instruments

We manage our economic and transaction exposure to certain risks by using foreign exchange forward contracts to hedge against the effect of Canadian dollar exchange rate fluctuations on a portion of our net investment in our Canadian operations and by using interest rate swaps to mitigate interest rate risk on our $500 million of principal amount of notes due October 1, 2028. In addition, we use foreign currency forward contracts not designated as hedging instruments to manage the impact of fluctuations in foreign currency exchange rates relative to recognized receivable and payable balances denominated in non-functional currencies.

Our derivative instruments designated as net investment hedges and fair value hedges are recorded on our Condensed Consolidated Balance Sheets at fair value. See Note 4, Fair Value Measurements, for gross fair values of our outstanding derivative instruments and corresponding fair value classifications.

Notional amounts of our derivative instruments were as follows ($ in millions):


	November 1, 2025		February 1, 2025		November 2, 2024
Derivatives designated as net investment hedges	$	119	$	119	$	119
Derivatives designated as fair value hedges (interest rate swaps)	500		500		500
No hedge designation (foreign exchange contracts)	75		42		129
Total	$	694	$	661	$	748

Effects of our fair value hedges included in Interest expense on our Condensed Consolidated Statements of Earnings were as follows ($ in millions):


	Gain (Loss) Recognized
	Three Months Ended				Nine Months Ended
	November 1, 2025		November 2, 2024		November 1, 2025		November 2, 2024
Interest rate swaps	$	(8)	$	(14)	$	7	$	(5)
Adjustments to carrying value of long-term debt	8		14		(7)		5
Total	$	-	$	-	$	-	$	-

6. Debt

Short-Term Debt

U.S. Revolving Credit Facility

On April 18, 2025, we entered into a $1.25 billion five-year senior unsecured revolving credit facility agreement (the “Five-Year Facility Agreement”) with a syndicate of banks. The Five-Year Facility Agreement replaced the previous $1.25 billion senior unsecured revolving credit facility (the “Previous Facility”) with a syndicate of banks, which was entered into April 2023 and scheduled to expire April 2028, but was terminated on April 18, 2025. The Five-Year Facility Agreement permits borrowings of up to $1.25 billion and expires in April 2030. There were no borrowings outstanding under the Five-Year Facility Agreement as of November 1, 2025, or the Previous Facility as of February 1, 2025, or November 2, 2024.

Long-Term Debt

Long-term debt consisted of the following ($ in millions):


	November 1, 2025		February 1, 2025		November 2, 2024
Notes, 4.45%, due October 1, 2028 ("2028 Notes")	$	500	$	500	$	500
Notes, 1.95%, due October 1, 2030 ("2030 Notes")	650		650		650
Interest rate swap valuation adjustments	(7)		(14)		(16)
Subtotal	1,143		1,136		1,134
Debt discounts and issuance costs	(6)		(7)		(7)
Finance lease obligations	28		25		29
Total long-term debt	1,165		1,154		1,156
Less current portion	10		10		12
Total long-term debt, less current portion	$	1,155	$	1,144	$	1,144

Fair Value and Future Maturities

See Note 4, Fair Value Measurements, for the fair value of long-term debt. The 2028 Notes mature in fiscal 2029 and the 2030 Notes mature in fiscal 2031.

7. Revenue

We generate substantially all of our revenue from contracts with customers from the sale of products and services. Contract balances primarily relate to unfulfilled membership benefits and services not yet completed, product merchandise not yet delivered to customers, unredeemed gift cards and deferred revenue from our private label and co-branded credit card arrangement. Contract balances were as follows ($ in millions):


	November 1, 2025		February 1, 2025		November 2, 2024
Receivables, net(1)	$	605	$	504	$	471
Short-term contract liabilities included in:
Unredeemed gift card liabilities	231		253		246
Deferred revenue	853		951		878
Accrued liabilities	67		50		58
Long-term contract liabilities included in:
Long-term liabilities	209		229		237

(1)Receivables are recorded net of allowances for expected credit losses of $15 million, $20 million and $16 million as of November 1, 2025, February 1, 2025, and November 2, 2024, respectively.

During the first nine months of fiscal 2026 and fiscal 2025, $1,003 million and $1,054 million of revenue was recognized, respectively, that was included in the contract liabilities at the beginning of the respective periods.

Estimated revenue from our contract liability balances expected to be recognized in future periods if the performance of the contract is expected to have an initial duration of more than one year is as follows ($ in millions):


Fiscal Year	Amount
Remainder of fiscal 2026	$	9
Fiscal 2027	35
Fiscal 2028	31
Fiscal 2029	27
Fiscal 2030	27
Fiscal 2031	27
Thereafter	89

See Note 11, Segments, for information on our revenue by reportable segment and product category.

8. Earnings per Share

We compute our basic earnings per share based on the weighted-average number of common shares outstanding and our diluted earnings per share based on the weighted-average number of common shares outstanding adjusted by the number of additional shares that would have been outstanding had the potentially dilutive common shares been issued as calculated using the treasury stock method.

Reconciliations of the numerators and denominators of basic and diluted earnings per share were as follows ($ and shares in millions, except per share amounts):


	Three Months Ended				Nine Months Ended
	November 1, 2025		November 2, 2024		November 1, 2025		November 2, 2024
Numerator
Net earnings	$	140	$	273	$	528	$	810
Denominator
Weighted-average common shares outstanding	210.7		214.8		211.4		215.7
Dilutive effect of stock compensation plan awards	1.4		1.9		1.3		1.5
Weighted-average common shares outstanding, assuming dilution	212.1		216.7		212.7		217.2

Potential shares which were anti-dilutive and excluded from weighted-average share computations	-		-		0.1		-

Basic earnings per share	$	0.67	$	1.27	$	2.50	$	3.76
Diluted earnings per share	$	0.66	$	1.26	$	2.48	$	3.73

9. Repurchase of Common Stock

On February 28, 2022, our Board of Directors approved a $5.0 billion share repurchase program. The program had $3.1 billion remaining available for repurchases as of November 1, 2025. There is no expiration date governing the period over which we can repurchase shares under this authorization.

Information regarding the shares we repurchased and retired was as follows ($ and shares in millions, except per share amounts):


	Three Months Ended				Nine Months Ended
	November 1, 2025		November 2, 2024		November 1, 2025		November 2, 2024
Total cost of shares repurchased	$	34	$	135	$	201	$	285
Average price per share	$	74.03	$	95.43	$	67.28	$	87.19
Number of shares repurchased and retired	0.5		1.4		3.0		3.2

10. Contingencies

We are involved in a number of legal proceedings. Where appropriate, we have made accruals with respect to these matters, which are reflected on our Condensed Consolidated Financial Statements. However, there are cases where liability is not probable or the amount cannot be reasonably estimated and, therefore, accruals have not been made. We provide disclosure of matters where we believe it is reasonably possible the impact may be material to our Condensed Consolidated Financial Statements.

11. Segments

Segment and category revenue information was as follows ($ in millions):


	Three Months Ended				Nine Months Ended
	November 1, 2025		November 2, 2024		November 1, 2025		November 2, 2024
Domestic:
Computing and Mobile Phones	$	4,368	$	4,065	$	12,090	$	11,445
Consumer Electronics	2,351		2,425		6,939		7,267
Appliances	965		1,057		3,040		3,324
Entertainment	543		479		1,673		1,497
Services	591		601		1,751		1,769
Other	60		70		210		221
Total Domestic revenue	$	8,878	$	8,697	$	25,703	$	25,523
International:
Computing and Mobile Phones	$	420	$	386	$	1,090	$	1,012
Consumer Electronics	202		194		573		553
Appliances	64		67		201		213
Entertainment	54		47		164		132
Services	47		47		123		124
Other	7		7		23		23
Total International revenue	794		748		2,174		2,057
Total revenue	$	9,672	$	9,445	$	27,877	$	27,580

Adjusted operating income by segment and the reconciliation to consolidated earnings before income tax expense and equity in income (loss) of affiliates were as follows ($ in millions):


	Three Months Ended
	November 1, 2025						November 2, 2024
	Domestic (1)		International		Total		Domestic (1)		International		Total
Revenue	$	8,878	$	794	$	9,672	$	8,697	$	748	$	9,445
Cost of sales	6,811		613		7,424		6,648		580		7,228
Adjusted SG&A (2)	1,707		153		1,860		1,711		155		1,866
Adjusted operating income	$	360	$	28	388		$	338	$	13	351
Restructuring charges					(5)						(4)
Goodwill and intangible asset impairments					171						-
Intangible asset amortization					3						5
Long-lived asset impairment					21						-
Operating income					198						350
Other income (expense):

Investment income and other					19						19
Interest expense					(12)						(13)
Earnings before income tax expense and equity in income (loss) of affiliates					$	205					$	356

(1)Domestic segment adjusted operating income includes certain operations that are based in foreign tax jurisdictions and primarily relate to sourcing products into the U.S.

(2)Adjusted SG&A excludes amortization of definite-lived intangible assets associated with acquisitions and non-cash impairments of certain long-lived assets.


	Nine Months Ended
	November 1, 2025						November 2, 2024
	Domestic (1)		International		Total		Domestic (1)		International		Total
Revenue	$	25,703	$	2,174	$	27,877	$	25,523	$	2,057	$	27,580
Cost of sales	19,695		1,691		21,386		19,530		1,583		21,113
Adjusted SG&A (2)	4,968		433		5,401		4,966		436		5,402
Adjusted operating income	$	1,040	$	50	1,090		$	1,027	$	38	1,065
Restructuring charges					218						4
Goodwill and intangible asset impairments					171						-
Intangible asset amortization					12						16
Long-lived asset impairment					21						-
Operating income					668						1,045
Other income (expense):
Loss on disposal of subsidiaries					(4)						-
Investment income and other					52						65
Interest expense					(36)						(38)
Earnings before income tax expense and equity in income (loss) of affiliates					$	680					$	1,072

(1)Domestic segment adjusted operating income includes certain operations that are based in foreign tax jurisdictions and primarily relate to sourcing products into the U.S.

(2)Adjusted SG&A excludes amortization of definite-lived intangible assets associated with acquisitions and non-cash impairments of certain long-lived assets.

Other expense and cash flow information by segment was as follows ($ in millions):


	Three Months Ended				Nine Months Ended
	November 1, 2025		November 2, 2024		November 1, 2025		November 2, 2024
Capital expenditures
Domestic	$	158	$	174	$	469	$	472
International	30		19		60		56
Total capital expenditures	$	188	$	193	$	529	$	528
Depreciation and amortization
Domestic	$	196	$	202	$	598	$	619
International	10		11		30		31
Total depreciation and amortization	$	206	$	213	$	628	$	650

Asset information by segment was as follows ($ in millions):


	November 1, 2025		February 1, 2025		November 2, 2024

Domestic	$	15,219	$	13,567	$	15,551
International	1,567		1,215		1,467
Total assets	$	16,786	$	14,782	$	17,018

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